What’s the true value of the president’s pay cut?

 By MUNGAI KIHANYA

The Sunday Nation

Nairobi,

16 March 2014

The best illustration of the state of Kenya’s public service wage bill was given on Easy-FM’s breakfast show “The State of the Nation” on Wednesday this week. The presenter said: “Imagine that you earn Sh10,000 per month and you have employed a cook whom you pay Sh3,500 and a cleaner whose salary is Sh2,000 monthly. In total, you are paying Sh5,500 in salaries leaving only Sh4,500 for rent, food clothing and other basic necessities!” That would be very unwise.

Unfortunately, the debate has been reduced to the question of whether President Uhuru Kenyatta’s voluntary offer to cut his salary by 20% from about Sh1,200,00 to Sh960,000 will make a significant dent in the national wage bill. The answer to that question is obviously no!

A saving of Sh240,000 monthly accumulates to Sh2,880,000 per year. That looks like a lot of money until it is juxtaposed with the national wage bill of Sh458 billion; it works out to just over 0.0006%.

So we are left to wonder why the President took this course of action knowing that it’s financial effect is so insignificant. I think that would be the wrong yardstick to measure the pay cut with. The true value of his gesture is political and social. The question is: would the whole nation be debating the wage bill if the President had not made his offer? I don’t think so.

As a matter of interest, even if all the salaries and allowances of public servants were cut by 10%, the total saving would still be insignificant at Sh45 billion out of Sh458 billion. It’s like the fellow who earns Sh10,000 cutting the salaries of his employees to Sh5,000. He still wouldn’t survive on the remaining Sh5,000 and it would remain a very unwise situation to be in.

Therefore, more stringent and bold measures are required. From where I sit, I think the wage bill must go below Sh300 billion immediately for the economy to have any chance of pulling through. That underscores the need to continue the present national debate on the matter. 

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 When we say that something is faster than another, it is obvious that it takes a short time. But does, say 30% faster mean that it takes 30% less time? To answer that, we need a practical illustration.

Suppose you drive your car at a steady speed of 60km/h. It will take you one hour to travel 60km (obviously!). What happens if you increase the speed by 30% to 78km/h: how much time would it take to travel over 60km?

The answer is 60 divided by 78; which comes to 48minutes. That is, you cut the time by 12 minutes. Now 12 out of 60 is 20%. In other words, a 30% increase in speed yields a 20% decrease in time taken.

That might sound confusing but it shouldn’t be; after all, there is no increment in speed that can yield a 100% reduction in the time taken. Indeed, a 100% increase of speed to 120km/h cuts the duration of travel by 50%. As noted several years ago in this column, these are the kind of thoughts that led Albert Einstein to the discovery of the theories of relativity.